Lately it feels like all we hear about is monopolies. It doesn’t matter what industry you look into or what sector you want to invest in. Everyone wants to invest in the next Tesla(TSLA) or Shopify(SHOP). Those companies right now feel like they have nothing holding them back and that they are just going to the moon. The crazy part of it all though? Those 2 companies aren’t even top in their respective sectors, but everyone wants them like Park Place and Boardwalk. Oh yah, expect some monopoly puns in here as well.
Take Tesla for example, they are literally last when it comes to vehicle sales. You could very easily go for the biggest and best in Toyota(TM) or Honda(HMC) and sit on your “free parking” for a little while. Right now vehicle sales are going to be going up, even used vehicles. I had a conversation with Colby a few weeks ago about that and we basically discussed that with less people wanting to take public transportation they are buying cheap used vehicles. Not everyone is buying used though and that is also good for those companies as well. But Tesla’s are not cheap so how do they fit into this whole market?
As far as technology goes? Shopify is just a rising star along side Amazon(AMZN) who’s very own Jeff Bezos(a personal hero of mine) just became the worlds wealthiest person being worth over $200 Billion. Amazon them selves are closing in on that $2 Trillion valuation but one of their biggest competitors Alibaba(BABA) who’s IPO only came out 6 years ago is getting close to that $1 Trillion dollar mark. Is there still room for other companies to hit it big in the online sales game? Surprisingly enough Best Buy(BBY) recorded positive earnings last week as online sales have gone up for the big box store giant. With any of these guys you really just need to take a “chance”.
Like I said, its pretty easy to look into any sector and pick out the top dogs that basically hold the market. It is also very easy and simple to look into the companies who are trying to take a small piece of those markets. Right now with Ride sharing it is basically divided between Lyft(LYFT) and Uber(UBER) but in Canada we currently have a company called Facedrive(FD) who is trying to expand into the US. Can you say “take a ride on the railroad?”. Ride sharing was incredibly popular before the pandemic and although it might take a little while to get back into it you know that at least 2 companies(maybe 3) will come on top and make it out of this situation. Right now its pretty easy to make a choice for any of these long term right now because you don’t really have much of a choice haha. But why not get on the train early and get it while its cheap right?
If you are thinking about getting into financials in Canada you are in luck, we have at least 5 different investment opportunities you can choose from. In reality any of them would be great investments long term. With the rules and regulations around them you cant go wrong, they are all very protected. The nice thing about Canadian banks is that alot of them pay their dividends on different months like CIBC(CM) pays their next dividend in October, Royal Bank(RY) pays theirs in November and so on. Just make sure that you collect your “$200 when you pass go” with all their high dividends.
Big ticket and popular items right now are the “utilities”. I mean think about it, everyone needs “power” and “water”(this almost seems to easy haha). The top dogs in North America are Fortis(FTS) and NextEra Energy Inc.(NEE) with Fortis being a Canadian company but they service Canada, the US and the Caribbean. NextEra Energy Inc is only in North America but they are a massive holding company who’s afiliated entities generate renewable energy through solar and wind power. Both of these companies will be around for a long time and we are in dire need of the facilities due to our growing demand for power and water.
Last and certainly least I would like to talk about one of the few investments everyone is turning a blind eye to. Reits. That’s right, its very hard right now to make an argument saying that Reits are a good investment. I will be honest, I have sold out of all my Reits. This is the only thing that doesn’t go with monopoly because its literally real estate. But no one is filling those empty office spaces, people are struggling to pay their rent and even pay their mortgage. I would not blame anyone for keeping their distance for the time being because I don’t think that this sector will pick up at least until there is a vaccine. So for now maybe do the right thing at the start of the game of monopoly and don’t buy anything just yet.
This basically plays out like the game of monopoly, you can never go wrong buying the top few companies of any sector by spreading around your investments and being successful with it. The biggest thing you need to remember though is due diligence. Just because they are the top of their respective sectors doesn’t mean that they don’t have skeletons in their closets. Not to mention it doesn’t hurt to hold some from each of these different sectors, diversity is the name of the game. You don’t want to get stuck or take a big hit by only sitting on 1 or 2 and maybe getting a “house” right? No way, you want those bad boy “hotels” and bring in the real money especially now with everyone still being beaten down. I feel like with everyone starting to go back to work and things picking up we will be seeing a rise in share prices for alot of companies. So for the mean time just think of monopoly as a good thing in the investing world and look to those top guys as a good safe investment.
That is all for today and remember everyone, invest in yourself first.